I currently have one buy and and hold investment property and I am eager to acquire a 2nd. I met my Realtor today and saw a property that fits my criteria but is also in great shape and therefore can be listed for rent almost immediately. The market in my area is insane and I do not want to miss out on this property which meets the 1.2% rule (not unusual for my market).
So, here's my question. I have access to a LOC that uses my investments as collateral as well as a HELOC that I can get access to very quickly. This will afford me the opportunity to place an all cash offer with quick closing. Now, here is where I get a tad confused. So after closing, then what? I have spent most of the evening reading through old forums, Google-ing and trying to understand my options and figure ways to determine which option is best.
I was thinking I could 1) use the LOC to purchase the property 2) do a refi of sorts after closing and pay off the LOC (amount will be less because of the max LTV being somewhere around 80%) then 3) use my cash to pay off the LOC. This way I can end up with a conventional 30 year loan and will have used my LOC to get a better price on the property. However, doing it this way will not allow me to use my cash to buy more properties as I will essentially still be putting 20% down on the house.
Does that plan sound doable and is it a smart thing to do or do I need to purchase Brandon's book on No and Low Money Down strategies to make my cash go farther? lol
Thank you for your time!
@Denise Mayo-Walley Use either or LOC/HELOC. Pay cash and fix anything needing addressed.
As soon as you get a closing date set up apt for repairs, advertise for tenants.
Close on prop and get tenant in place after repairs are made.
Should have been setting up refi already so that you can roll into it quickly after close.
Refi out of prop and pay back LOC/HELOC (interest rates can be higher on these loans) and pocket the difference :)
With cash in hand go get another one!
Hello @Jeff McCaskey and thank you for responding. Does the fact that the home does not need any repairs change anything? Here in the Houston area, even properties that require repairs are going for more than asking and with multiple offers. So even though I plan on paying cash, I will be purchasing it pretty much at its market value. The difference between the max cash I can get out and the total to be taken used from the LOC will be left over if that is the case - correct? And that will need to be paid off.
@Denise Mayo-Walley - Good morning! I am a Investment Real Estate Lender here in Houston, and believe that I can help.
As Jeff referenced, you can use the LOC/HELOC to purchase the property for "cash" and have the ability to close in only a matter of days.
Once you have closed, if you provide me with a copy of the HUD and your rehab budget, I am able to offer you a term loan up to 80% of your TOTAL (acquisition + rehab) cost.
Let me know how I can help and best of luck!
Thanks @William Dampier I will get the LOC squared away and may be reaching out to you in the near future!
Let me know how I can help!
Tomorrow I am closing on a home in Summit Hill, Pennsylvania 18250.
It is my first home ! :)
Buying for 17k. Needs a little work and After Repair Value of 58k to 70k.
I am either going to go a quick flip after the purchase and sell it as-is.
My real estate broker says he has buyers who will buy it as-is for
25k to 35k.
However, after reading this post and couple others on Bigger Pockets
about Cash out financing after the repair work is done I am considering
going this route. I am purchasing the property in cash using my
Are there any lender similar to William Dampier who provide
similar loans for properties in Summit Hill, PA area ?
@Dan G. any luck with this?
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